NEW DELHI: The country’s largest telecom operator Bharti Airtel will have a revenue growth of 8-10% over the next 12-18 months on strong demand for data services and affordable smartphones, Moody’s Investors Service said on Monday.
The aggregate average revenue of telecom operators in Asia Pacific will increase 3-4% over the next 12-18 months, similar to 2014’s growth rate of 3.8% and trending in line with a forecast average GDP growth for the region. Its outlook for the industry is stable, it said.
“Banglalink Digital Communications Ltd and Bharti Airtel Ltd will lead with revenue growth of 8-10% on strong demand for data services and affordable smartphones,” Moody’s said in a report. It said the revenue growth is slowing slightly because of increasing mobile-penetration rates and competition but it remains healthy.
The growth rates will be lower at 1-2% in developed markets such as Singapore, Australia, Japan and Korea versus emerging markets such as China, India, Thailand and Indonesia, where it expects growth rates of 5-6% in the next 12-18 months, it added.
“The revenue growth will remain broadly in line with their home countries GDP growth, given the domestic focus of the business,” it added.
The slower growth in the developed markets reflect the maturity and high tele-density of these markets, while in emerging markets, higher growth will be driven by increasing smartphone penetration and data consumption, it said.
Moody’s said that the average capital spending as a percentage of revenue will remain at around 25% for the rest of 2015 as companies such as Philippine Long Distance Telephone Company (PLDT) and Bharti continue to spend to meet high growth in data usage and network demands in their respective markets.
“These companies, along with many other telcos in developing markets, are accelerating their capex programmes in order to be 4G ready expeditiously and to be able to handle increasing volumes of data traffic,” it said.
Moody’s said in India, Bharti and Vodafone India are stepping up their 4G capex spending ahead of the 4G/LTE launch of Reliance Jio. In addition, capex for the current year will rise on upfront payments related to March 2015 spectrum auctions.
“Accordingly, we expect Bharti’s adjusted capex or revenue to peak to about 40% in 2015 from 28.4% in 2014, and then to decline to a more normalised level of around 24-25% in 2016,” Moody’s said.
It further added Reliance Communications capex will decline once its network-sharing agreements with Reliance Jio start kicking in by mid-2016. “We expect capex/revenue to decline from about 21% for the fiscal year ending March 2016 to 9% for the fiscal year ending March 2017,” it added.
